Black-swan events are meant to come about rarely. We often talk of once in a generation occurrences that batter and derail the global economy and the way the world works. But, they’re often more common than that.
In the past two years, we’ve been buffeted by a pandemic, several key supply disruptions caused by catastrophes at sea that blocked important trade routes; the impact of the UK leaving the European Union trade body; and, most recently, a war in Europe that scatters supply chains through physical disruption and sanctions.
It’s enough to blow even the best-planned supply chain off course and lo and behold, it has. As China, the world’s factory, struggles with Covid-enforced port closures, supply chains that were already tight have reached a breaking point. The world is redrawing its economic activity to cut out Russia after the country invaded Ukraine – an action which is affecting supplies of grain and cooking oil, as well as the oil we use to power our factories and cars. Catastrophe is being piled on top of catastrophe. “The expanded global nature and contracting diversity of supply chains have exacerbated this effect,” says Tim Morley, director at ISG.